We recently compiled a list of the 10 Best Undervalued Stocks to Buy Right Now. In this article, we are going to take a look at where LyondellBasell Industries N.V. (NYSE:LYB) stands against the other best undervalued stocks.
As per Evercore, the equity market rally is expected to further accelerate under the Donald Trump presidency. The S&P 500 is expected to touch 6,600 by June end. This growth in the index is expected to stem from Trump’s deregulatory agency, which should fuel corporate profits. Trump is expected to act fast to enact his policies.
The investment firm went on to add that measures such as deregulation and corporate tax cuts are expected to fuel business activity and unlock significant rally in stocks. The bull market’s 2-year run stemmed from healthy growth from mega-cap technology stocks, and high valuations are expected to further rise. Evercore hinted at data demonstrating that the average bull market witnessed an increase of 152% over 50 months, while the current market saw a run-up of only 65% over the previous 25 months.
Trump’s Next Presidency- How Will It Affect US Economy?
After Donald Trump’s win, economists and market strategists have been assessing how his economic policies might affect the broader US economy and equity markets. While the initial reaction was positive, some experts opine that Trump’s plans might fuel inflation, which will hurt consumers hoping to get some respite from it. Trump’s tax plan revolves around extending the provisions in the TCJA. The provisions are yet to expire at 2025 end. These provisions consist of lowered tax brackets and expanded standard deduction.
Trump’s campaign proposed lowering the corporate tax rate to 15% from the current rate of 21%. What will be the impact on the economy? Well, the economy might initially grow moderately under Trump’s plans. That being said, the impact might fade over time, mainly because of the effect of deporting millions of immigrants, as per Oxford Economics. As per the chief U.S. economist at Oxford Economics, the real GDP might grow 0.3 percentage points higher in 2026 as compared to the situation if existing policies continue. However, in 2028, the GDP growth might eventually fall to 0.6 percentage points lower in 2028 as compared to earlier projections as a result of deportations and increased tariffs.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Inflation Under Trump’s Presidency
Consumers tend to rank inflation among their biggest economic concerns. Global economists and market strategists believe that Trump’s Presidency can reignite inflation worries. According to investing legend, Jim Rogers, Trump’s tariffs might increase domestic inflation. As a result, the US Fed will be forced to keep the interest rates high. He further added that higher tariffs on goods, commodities, and products will lead to increased global inflation.
Moreover, Trump has plans to deport millions of immigrants. This can also fuel inflation as employers will experience labor crunch, resulting in higher wages.
While there are some uncertainties regarding the potential impacts of Trump’s economic policies, market experts believe that investors can go long on stocks that remain undervalued despite the recent rally.
Our Methodology
To list the 10 Best Undervalued Stocks to Buy Right Now, we used a screener and sifted through several online rankings to extract the list of stocks trading at a forward P/E multiple of less than 15. Next, we selected the stocks which were popular among hedge funds. Finally, the stocks were ranked in the ascending order of their hedge fund sentiments, as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A senior executive looking up at a large boardroom filled with the stocks their company manages.
LyondellBasell Industries N.V. (NYSE:LYB)
Forward P/E Ratio as of 8 November: 9.48x
Number of Hedge Fund Holders: 41
LyondellBasell Industries N.V. (NYSE:LYB) operates as a chemical company in the US, Germany, Mexico, Italy, and internationally.
LyondellBasell Industries N.V. (NYSE:LYB)’s strategy continues to focus on disciplined capital allocation and optimizing operations in a bid to ensure long-term value and competitive advantages. The company expects that the full acquisition of APK is expected to enhance the renewable and circular solutions portfolio. LyondellBasell Industries N.V. (NYSE:LYB)’s focus on growth consists of significant investments in recycling and low-carbon solutions, as demonstrated by the construction of MoReTec-1 facility and the acquisition of APK.
In Q3, LyondellBasell Industries N.V. (NYSE:LYB) started construction on the first commercial-scale plant to use its proprietary and differentiated advanced catalytic recycling technology, MoReTec-1. The facility should commence operations in 2026 and achieve high plastic-to-plastic yields, supporting the goal of producing and marketing at least 2 million metric tons of recycled and renewable polymers annually by 2030.
With a modular investment strategy, LyondellBasell Industries N.V. (NYSE:LYB) has been positioning itself for a future in which renewable solutions have elevated demand levels. The company was able to generate $670 million in cash from operating activities in Q3 2024 and achieved ~80% cash conversion over the previous 12 months. It continues to take a disciplined approach to capital allocation, with $368 million invested in capital expenditures and $479 million returned to shareholders via dividends and share repurchases.
As per Wall Street analysts, the shares of LyondellBasell Industries N.V. (NYSE:LYB) have an average price target of $101.91.
Overall, LYB ranks 7th on our list of the 10 best undervalued stocks to buy right now. While we acknowledge the potential of LYB as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than LYB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
